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Energy Wholesale Market Review, 4 September 2020

Headlines

Power and gas contracts saw mixed movements this week, with most near-term contracts rising and some seasonal contracts reducing. Day-ahead gas rose 12.5% to 29.80p/th, an eight-month high, continuing to find support from increased gas-for-power demand and ongoing maintenance on the Forties pipeline system. Day-ahead power fell 9.0% to £43.00/MWh, due to rising levels of wind output at the end of the week, but despite a fall in its gas counterpart. October 20 gas saw a large rise amid tightening LNG supplies for this coming Autumn, up 6.5% to 31.04p/th. Most seasonal gas contracts declined this week, down by 1.1% on average. An exception was winter 20 gas which increased 1.0% to 39.05p/th, but summer 21 gas slid 1.5% to 33.68p/th. Most seasonal power contracts followed their gas counterparts, with contracts falling on average by 1.1%. Winter 20 power expanded 0.2% to £51.09/MWh, while summer 21 fell 0.9% to £44.15/MWh. International commodities saw mixed, mostly relatively small, movements. Brent crude oil declined marginally while EU ETS carbon prices extended the previous weeks gains and at times went above €29/t.

Baseload electricity
Day-ahead power fell 9.0% to £43.00/MWh, as wind output picked up towards the end of the week. October 20 power climbed 1.8% to £44.28/MWh and November 20 power increased 6.3% to £54.91/MWh.		Q420 power moved 2.0% higher to £50.00/MWh. The annual October 20 contract lost 0.3% to £47.62/MWh, which was just 4.0% lower than the same time last year (£49.6/MWh) following several months of resurging prices.
Forward curve comparison		Annual October Contract
Peak electricity
Day-ahead peak power was up 2.1% to £48.00/MWh, despite a fall in its baseload counterpart amid colder weather and tighter forecast supply margins over peak periods. October 20 peak power gained 3.4% at £50.32/MWh, but November 20 peak power decreased 1.0% to £62.06/MWh.		The annual October 20 peak power contract lost 1.7% to £53.8/MWh. This is just 4.3% lower than the same time last year (56.22/MWh).
Forward curve comparison		Annual October contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
Most seasonal power contracts declined this week, down on average by 1.1%. Winter 20 power expanded 0.2% to £51.09/MWh, while summer 21 fell 0.9% to £44.15/MWh.		Most seasonal peak power contracts boosted this week, up 1.6% on average. Winter 20 and summer 21 peak power increased 2.1% and 1.3% respectively, falling to £59.23/MWh and £48.37/MWh.
Commodity price movements
Oil and Coal		Carbon
Brent crude oil prices remained relatively unchanged this week, falling slightly to average $44.97/bl. Prices have now stabilised following recent spikes at a near five-month high. The news this week concerning Hurricane Laura weighed on prices amid fears of production disruption. Early reports indicate that the threat of extensive damage from Hurricane Laura was avoided as the hurricane was downgraded from a Category 4 to a tropical storm.		API 2 coal prices rose 4.6% this week to average $57.06/t. Following recent gains, EU ETS prices rose a further 1.6% to average €28.56/t this week. The market experienced mixed movements and volatility this week, with EUA’s briefly lifting above €29/t on 3 September. The carbon price held onto these gains for the remainder of the week supported further by prices lifting comfortably over €28/t following the biggest auction in a five week period.
Wholesale price snapshot